(a) Availability of Small Company Offering Registration ("SCOR").

(1) An issuer may register securities by qualification under Section 7306 of the Act by using the Form U-7 (Small Company Offerings Registration Form) if the conditions set forth in this regulation and in the instructions to Form U-7 are satisfied.

(2) In general, a company may do a SCOR offering if it is relying upon an exemption from registration with the SEC under the Federal Securities Act of 1933 provided by SEC Regulation A (17 C.F.R. §§230.251-263); Rule 504 of SEC Regulation D (17 C.F.R. §230.504); or by Section 3(a)(11) of the Securities Act of 1933 and Rule 147 promulgated thereunder (17 C.F.R. §230.147).

(3) Under SEC Regulation A, the aggregate amount of the offering cannot exceed $5,000,000.00. Under Rule 504 of SEC Regulation D, the aggregate offering amount cannot be more than $1,000,000.00. An offering under Section 3(a)(11) of the Securities Act of 1933 and SEC Rule 147 may be in any amount but, among other requirements, all securities must be offered and sold only to Delaware residents. The company also must be resident and doing business in Delaware and eighty percent of the net proceeds of the offering must be used in the operation of the company’s business in Delaware.

(b) Prospectus. A completed Form U-7 that has been declared effective by the Commissioner shall serve as the prospectus for an offering registered under this regulation.

(c) Eligibility of Issuer. To be eligible to register securities under this regulation, the issuer must satisfy the following conditions:

(1) The issuer is a corporation or centrally managed limited liability company organized under the law of the United States or Canada, or any state, province, or territory or possession thereof, or the District of Columbia and have its principal place of business in one of the foregoing;

(2) The issuer is not subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. §§78m, 78o(d);

(3) The issuer is not an investment company registered or required to be registered under the Investment Company Act of 1940, 15 U.S.C. §§80a-1 to 80a-52;

(4) The issuer is not engaged in and does not propose to be engaged in petroleum exploration and production, mining, or other extractive industries;

(5) The issuer is not a development stage company that either has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies or other entity or person; and

(6) The issuer is not disqualified under subsection (i) of this regulation.

(d) Minimum price. The offering price for common stock or common ownership interests (hereinafter, collectively referred to as common stock), the exercise price for options, warrants, or rights to common stock, or the conversion price for securities convertible into common stock, must be greater or equal to $5.00 per share or unit of interest. The issuer must agree with the administrator that it will not split its common stock, or declare a stock dividend for two years after the effective date of the registration if such action has the effect of lowering the price below $5.00.

(e) Commissions, fees or other remuneration for soliciting any prospective purchaser in connection with the offering in the state are only paid to persons who, if required to be registered or licensed, the issuer believes, and has reason to believe, are appropriately registered or licensed in the state.

(f) Financial statements shall be prepared in accordance with either U.S. or Canadian generally accepted accounting principles. If appropriate, a reconciliation note should be provided. If the company has not conducted significant operations, statements of receipts and disbursements shall be included in lieu of statements of income. Interim financial statements may be unaudited. All other financial statements shall be audited by independent certified public accountants; provided, however, that if each of the following four conditions are met, such financial statements in lieu of being audited may be reviewed by independent certified public accountants in accordance with the Accounting and Review Service Standards promulgated by the American Institute of Certified Public Accountants or the Canadian equivalent:

(1) the company shall not have previously sold securities through an offering involving the general solicitation of prospective investors by means of advertising, mass mailing, public meetings, "cold call" telephone solicitation, or any other method directed toward the public;

(2) the company has not been previously required under federal, state, provincial or territorial securities laws to provide audited financial statements in connection with any sale of its securities;

(3) the aggregate amount of all previous sales of securities by the company (exclusive of debt financing with banks and similar commercial lenders) shall not exceed $1,000,000.00; and

(4) the amount of the present offering does not exceed $1,000,000.00.

(g) The offering shall be made in compliance with Rule 504 of Regulation D, Regulation A, or Section 3(a)(11) of the Securities Act of 1933.

(h) Filing Requirements and Fees. The issuer shall file an executed Form U-1, Form U-2, Form U-2A, Form U-7 with exhibits, and shall include the fee required by Rule 404. In addition, if the offering is made pursuant to Rule 504 of Regulation D, the issuer shall file a copy of its Form D as part of its SCOR application; if the offering is made pursuant to Regulation A, the issuer shall file a copy of its Form 1-A as part of its SCOR application. That filing shall be made with the Commissioner at the same time it is filed with the SEC.

(i) Disqualification. Unless the Commissioner determines that it is not necessary under the circumstances that the disqualification under this section be applied, application for registrations under this regulation shall be denied if the issuer, any of its officers, directors, ten percent or greater stockholders, promoters, or selling agents, or, any officer, director or partner of any selling agent:

(1) has filed an application for registration which is subject to a currently effective stop order entered pursuant to any state or provincial securities laws within ten years prior to the filing of the registration statement;

(2) has been convicted, within ten years prior to the filing of the current application for registration, of any felony or misdemeanor in connection with the offer, purchase, or sale of securities, or of any felony involving fraud or deceit, including, but not limited to, forgery, embezzlement, obtaining money under false pretenses, larceny, or conspiracy to defraud;

(3) is currently subject to any state or provincial administrative enforcement order or judgment entered by that state’s or province’s securities administrator within ten years prior to the filing of the current application for registration;

(4) is subject to any state or provincial administrative enforcement order or judgment in which fraud or deceit, including, but not limited to, making untrue statements of material facts and omitting to state material facts, was found, and the order or judgment was entered within ten years prior to the filing of the current application for registration;

(5) is subject to any state or provincial administrative enforcement order or judgment which prohibits, denies, or revokes the use of any exemption from registration in connection with the offer, purchase or sale of securities;

(6) is currently subject to any order, judgment, or decree of any court of competent jurisdiction that temporarily, preliminarily, or permanently restrains or enjoins such party from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security, or involving the making of any false filing with the state, entered within ten years prior to the filing of the current application for registration; or

(7) has violated the law of a foreign jurisdiction governing or regulating any aspect of the business of securities or banking or, within the past ten years, has been the subject of an action of a securities regulator of a foreign jurisdiction denying, revoking or suspending the right to engage in the business of securities as a broker-dealer, agent, investment adviser or investment adviser representative, or is the subject of an action of any securities exchange or self-regulatory organization operating under the authority of the securities regulator of a foreign jurisdiction suspending or expelling such person from membership in such exchange or self-regulatory organization.

(j) Waiver of disqualifications. Any of the disqualifications listed in subsection (i) of this Rule may be waived if the Commissioner in the exercise of his discretion should find good cause for such waiver.